I am thinking from a process perspective. What process are the most trouble some, why and for what reason? What are the risks of these issues and how should businesses seek to overcome them? Perspective includes how better to improve the processes to eradicate these business challenges?

Hello and welcome again. Your question is bit open ended as it has indifinite scope for a reply. However, let me try and explain you in most concise manner that I can.

As you would agree,Financial planning is an integral part of financial management. This activity requires a lot of study and research, before one goes about drawing a plan and implementing it. Not to miss an important point on this subject, risk assessment is an integral part of any planning. This involves certain key processes, which are daunting to say the least and requires constant adeptability and concurrent risk management.

The first daunting task / process is to Understand and Identify Financial Neets. The primary responsibility in the financial planning is conducting a need analysis. This process would help you identify, analyze and achieve your investment goals or for that matter any corporate objective. The most important thing here is to identify your business goals and define your investment objective very clearly.

The second process that is pressing would be Gathering Financial Data: The above process, if to be done very efficiently will require that you gather correct and adequate financial data. This process often faces difficulties like improper dissemination of data from the source, multiple availability of sources which quention the authenticity of the data, etc. To eliminate the problem one has to ensure that financial data collected is from authentic source and mostly sourced from the investors relation department and if pertains to owned company, a proper structure, preferable automated should be set up for reporting.

The third process that I can identify is Proper Asset Management. This calls for the efficient management of current assets (cash, receivables, inventory) and current liabilities (payables, accruals) turnovers and the enhanced management of its working capital and cash conversion cycle. Companies must utilize this practice when their operating performance falls behind industry benchmarks or benchmarked companies.

The fourth process that I can identify that can be important and as daunting is Financing Decisions and Capital Structure. Here, financing is limited to the optimal capital structure (debt ratio or leverage), which is the level that minimizes the firm’s cost of capital. This optimal capital structure determines the firm’s reserve borrowing capacity (short- and long-term) and the risk of potential financial distress.

The fifth such process is Risk Assessment and Management. A firm must address its key uncertainties by identifying, measuring, and controlling its existing risks in corporate governance and regulatory compliance, the likelihood of their occurrence, and their economic impact. Then, a process must be implemented to mitigate the causes and effects of those risks.Companies must make these assessments when they anticipate greater uncertainty in their business or when there is a need to enhance their risk culture.

The sixth such process that I see is Tax Management and Optimization. Many functional areas and business units need to manage the level of tax liability undertaken in conducting business and to understand that mitigating risk also reduces expected taxes.

The most structures approach to overcome any difficulties or maintain accuracy would be to develop reporting systems for data reporting and setting up equally efficient systems for data analysis and effective dissemination.

I am sure this would help.

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